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Both crude oil and gasoline prices touched multi-month highs this week, likely induced by narrower inventories of petroleum products and increasing exports out of the US. More gasoline has been drained from American commercial stockpiles in the past nine weeks than in any other identical period throughout the past five years and overseas shipments are likely being boosted by an ongoing suspension of Russian gasoline exports. Increasing international needs for gasoline are weighing on narrower crude output growth in North America.

The wars in Gaza and Ukraine are each providing bullish catalysts for oil futures, particularly a wave of ongoing drone strikes that have targeted almost half of Russia’s major oil refineries. With these geopolitical issues largely outside of the White House’s control, the Department of Energy has decided it will cancel the acquisition of 3 million barrels of oil meant to be delivered to the Strategic Petroleum Reserve (SPR) later this year. The administration has had to balance their desire to re-fill the relatively thin SPR with the risk that their buys could stoke oil demand and increase prices, but futures have now risen too far above a $79.00 per barrel target to maintain its repurchase schedule.

Related ETFs: Energy Select Sector SPDR Fund (XLE), Invesco DB Oil Fund (DBO), United States Gasoline Fund, LP (UGA), United States Natural Gas Fund, LP (UNG)

International benchmark Brent crude oil futures closed north of $89.50 per barrel yesterday evening, a five-month high. At the same time, GasBuddy indicated that national average gasoline price across the US reached a six-month high of $3.58 per gallon, up by more than 2% YoY. Gasoline retailers tracked by the EIA are selling for slightly less at $3.52, but this figure has still risen almost 14% in the year-to-date period. Narrowing petroleum product inventories appear to be igniting a fire under energy prices.

US gasoline inventories fell for the eighth time in nine weeks throughout the seven days to March 29, decreasing by -4.256 million barrels. More gasoline has been drained from commercial stockpiles in the past nine weeks (-26.318 million barrels) than in any other identical period throughout the past five years. MRP has suggested before that the ongoing drain of American gasoline stockpiles can be partially ascribed to an increased pace of exports recently. That may be bolstering oil futures in spite of a net increase in US inventories of crude oil throughout 2024. New EIA data shows total US exports of finished motor gasoline in the six months to January reached their highest level since April at 156.2 million barrels.

Deep declines in gasoline stocks mean that higher levels crude oil will need to be processed to fill the gap, but US exports of crude oil have also been surging lately. The six-month sum of overseas shipments rose to an all-time high of more than 765.4 million barrels in the latest data release. Though the US is on track to produce more crude oil in 2024 than in any other year before it, the share of monthly exports relative to output remained very elevated at…

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